Correlation Between Brandes International and Brown Advisory

Can any of the company-specific risk be diversified away by investing in both Brandes International and Brown Advisory at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Brandes International and Brown Advisory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brandes International Small and Brown Advisory Funds, you can compare the effects of market volatilities on Brandes International and Brown Advisory and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Brandes International with a short position of Brown Advisory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes International and Brown Advisory.

Diversification Opportunities for Brandes International and Brown Advisory

0.0

Correlation Coefficient

Brandes International  Brown Advisory

Pay attention - limited upside

The 3 months correlation between Brandes and Brown is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brandes International Small and Brown Advisory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Funds and Brandes International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Brandes International Small are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Funds has no effect on the direction of Brandes International i.e., Brandes International and Brown Advisory go up and down completely randomly.

Pair Corralation between Brandes International and Brown Advisory

If you would invest  1,846  in Brandes International Small on December 29, 2024 and sell it today you would earn a total of  239.00  from holding Brandes International Small or generate 12.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Brandes International Small  vs.  Brown Advisory Funds

Brandes International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes International Small are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Brandes International showed solid returns over the last few months and may actually be approaching a breakup point.

Brown Advisory Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brown Advisory Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Brown Advisory is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brandes International and Brown Advisory

The main advantage of trading using opposite Brandes International and Brown Advisory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes International position performs unexpectedly, Brown Advisory can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brown Advisory will offset losses from the drop in Brown Advisory's long position.

The idea behind Brandes International Small and Brown Advisory Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.